When withdrawing funds from individual retirement accounts, Roth IRAs and other such accounts, retirees may encounter inconveniences, taxes and penalties. However, proper planning may reduce or even eliminate such costs. There are techniques that retirees should use to withdraw funds from their tax-sheltered retirement accounts prior to reaching the age of 59 ½.

You can withdraw your contributions to Roth IRAs anytime for any reason without being subject to tax or penalty, irrespective of your age. The IRS permits holders of traditional IRAs to label withdrawals as “contributions” until all contributions have been resolved. Upon withdrawal of the contribution part of the account, you can then remove the earnings portion. But if you have not yet reached age 59 ½, the earnings could be taxed as income and you may have to pay a 10 percent penalty.

It could be an expensive error for the retiree to roll over a work-related retirement plan to an IRA if you need the funds before reaching age 59 ½. If you are age 55 or older and you have stopped working, you can withdraw money from your 401(k) or 403(b) account without being subject to the 10 percent penalty that would usually apply to withdrawals from an IRA owned by an individual under age 59 ½.

You can also remove funds from a 457 plan from a government or nonprofit employer without being subject to a ten percent penalty. If you withdraw funds from a work-related retirement plan, they will be taxed as ordinary income. But since early retirees will have less income, their tax bill will be smaller.

If you must withdraw funds from your IRA to pay for living expenses before reaching age 59½, you should determine whether you have any qualifying expenses that can be set against the IRA withdrawals to avoid the ten percent penalty. Such costs could include considerable out-of-pocket medical bills, higher education expenses or health insurance premiums if you are unemployed.

Furthermore, IRA holders under age 59 ½ can make withdrawals from the account without incurring a penalty if the withdrawals are similar in amount and comply with a certain schedule. These are referred to as substantially equal periodic payments (SEPP). Under the SEPP program, once the payments have started, they must continue for five years or until you attain the age of 59 ½, whichever is second. However, if the requisite amounts and timing of the SEPP accounts are not met exactly, all withdrawals may be subject to the ten percent penalty retroactively.

Although most people plan to work until they reach their full retirement age of 66, or 67 if you were born after 1942, some workers find themselves without work at an age when it is challenging to find another job, and at a time when they anticipated earning their maximum salary. Others are compelled to leave the workforce due to illness or family obligations as a caregiver.

According to experts, approximately 45 percent of people retire sooner than they planned. It is smart to have a contingency plan for early retirement.

It may not be feasible to secure a job that pays well, particularly for those in industries that largely depend on contractors. Even though it is illegal for employers to practice age discrimination, several older workers have difficulty finding work. If you are forced to retire early, your best option may be to find new work, even if it is not in your chosen field, and even if the compensation does not approach the amount you are accustomed to earning. Alternatively, you may find it more reasonable to reduce your expenses. Or you may decide to do both.

Another cost-effective measure is to avoid using your Social Security early, even if that means withdrawing funds from your retirement savings. If you claim social security at age 62, your monthly benefit will be 25 percent less than it would have been if you had delayed your retirement until you attained the full retirement age of 66 or 67. And if you wait to retire until you are age 70, you will receive another 32 percent.

Some options to consider if you must retire early are to accept a position that pays a lower salary, work part-time or become a consultant, reduce expenses, apply for unemployment benefits, seek health insurance on the Affordable Care Act exchange, have your college-age children decrease their expenses and consult a financial adviser.

You may also wish to conduct research of Social Security to make certain that you are collecting the maximum possible amount, continue to network professionally and pursue hobbies that make you happy.

Deciding what type of health insurance to get can be a daunting task for seniors. Medicare is highly regarded and very popular, but Medicare Advantage differs in ways that could be advantageous to some.

Original Medicare includes Medicare Part A (hospital expenses) and Part B (other health care such as doctor’s office visits). The monthly premium for most participants is $104.90. Participants also pay “coinsurance” of 20 percent of most medical services.

Medicare Advantage, or Medicare Part C plans, are run by private insurance companies, and must offer comparable coverage to parts A and B. Some Medicare Advantage plans charge the same premium as Original Medicare, but many charge an additional premium. Most also charge coinsurance or a copay (a flat fee for a medical service), and these fees vary from plan to plan.

Original Medicare offers the widest choice of doctors and other health care providers. This may be particularly important to you if you like to travel. Original Medicare also has a lower monthly cost than most Medicare Advantage plans.

Most Medicare Advantage plans cover prescription drugs, which costs extra under Original Medicare. Medicare Advantage plans, by law, have a maximum out-of-pocket expense of $6,700 per year. This can give peace of mind, but most people’s out-of-pocket Medicare spending is far less than this amount. Some plans also offer vision, dental, assisted living and nursing home care, unlike Original Medicare.

The decision to go with Original Medicare or Medicare Advantage can only be made based on the particular terms of the Advantage plan that interests you. Because they are offered by private companies, Advantage plans vary widely in terms of their coverages, premiums, copays and coinsurance fees. Consider carefully the pros and cons of each option and consult with an expert if you need help deciding.

If you were denied coverage or payment by Medicare, you have the option of filing an appeal. The denial must be from Medicare, your Medicare Prescription Drug Plan or your Medicare health plan. It is within your right to file an appeal if you were denied any of the following:

A health care service, prescription drug, item or supply which you think you are entitled to
receive;

Payment for a health care service, prescription drug, item or supply that you already received;

A change in the amount you are required to pay for a healthcare service, prescription drug,
item or supply.

You can also file an appeal if Medicare or your plan ceases to offer or pay for your health care service, prescription drug, item or supply. If you are enrolled in a Medicare Medical Savings Account (MSA) Plan, you can file an appeal if you believe that you have satisfied your deductible or you think that a service or item should be applied toward your deductible.

In the event that you decide to file an appeal, request any information that could be helpful to your case from your physician, health care provider or supplier. The appeals process consists of five levels. If you do not agree with the decision reached at any level, you can usually proceed to the next level.

The first step in filing an appeal is to review your Medical Summary Notice (MSN), which lists all of the services and supplies that were billed to Medicare during a time frame of three months. It also reveals the amount paid by Medicare, and the amount you may be required to pay the provider. In addition, the MSN shows whether Medicare has denied your medical claim.

You will receive an MSN by mail every three months. Should you decide to file an appeal, you must do so within 120 days of the day on which you received the MSN in question.

Here are the three ways in which you can file an appeal:

Complete a “Redetermination Request Form” and mail it to the Medicare contractor.

On the back of the MSN, there are instructions for you to follow. You are required to mail your
request for redetermination to the firm that manages Medicare claims.

Mail a written request to the firm that manages Medicare claims.

You can also consult an elder law attorney who can help you file an appeal of a claim or reimbursement that was denied.

There are many living options available for seniors, and continuing care retirement communities (CCRCs) have become one of the most attractive. Many retirees consider such communities because they typically provide a range of services in one location, including independent living, adult care facilities and nursing home care. This setup allows seniors to “age in place,” staying in the same community as their needs change. Typically, residents pay an entrance fee (which may be refunded) and monthly charges.

However, consumers should consider the contract terms and other aspects of the community carefully, as there are potential risks involved.

Residents of a California CCRC have filed a class action lawsuit against the company that owns it, claiming misrepresentation and breach of fiduciary duty. The community, Vi at Palo Alto, charges a high entrance fee that is refunded if the resident moves out or passes away. The refunds naturally become part of the estate plans of the residents. However, the plaintiffs in the lawsuit claim that the company has no reserve fund to pay refunds and has moved money from entrance fees to a parent company that has no responsibility to pay refunds. For its part, the company says the refunds will be paid, and that it follows standard business practices.

The dispute is a reminder that consumers should be fully informed before entering into any long-term care contract. For more information about CCRCs in Virginia, visit the Virginia Division for the Aging, at www.vda.virginia.gov/ccrc.asp.

The National Council on Aging (NCOA) recently released a list of five recommendations for Congress to help American seniors in 2014.

1. Strengthen the Older Americans Act (OAA).

The OAA provides funding for critical services for seniors living independently at home, including nutrition, disease prevention, transportation and caregiver support. NCOA claims that funding has not kept pace with inflation or with the growing number of seniors, and that it has been further cut by the federal budget sequester. NCOA suggests that the OAA is overdue for reauthorization and should be both reauthorized and strengthened.

2. Make the Medicare QI program permanent.

The Medicare Qualified Individual (QI) program covers Medicare Part B premiums for seniors with income levels of 120-135% of the poverty level, helping low-income seniors afford visits to their doctors. QI has expired and been temporarily extended by Congress each year for several years. NCOA recommends Congress make the program permanent.

3. Renew the Farm Bill.

Upon renewal, the Farm Bill may increase funding for food banks and nutritional programs for seniors. However, Congress is pursuing cuts to the Supplemental Nutrition Assistance Program (SNAP).

4. Introduce long-term care legislation.

Medicare does not cover long-term care; private insurance is too expensive for many, and Medicaid forces seniors to spend or give away their life savings before qualifying. Recently, the Long-Term Care Commission issued a report with recommendations for improving the situation. NCOA calls for a bipartisan effort to introduce reform legislation that would provide affordable options for families and savings for Medicaid.

5. Pass immigration reform.

NCOA says 20-23% of direct care workers (such as nursing aides and home health aides) are foreign-born. Immigration reform could help strengthen that workforce.

Children with special needs and their advocates have made significant progress in their efforts to ensure that all children are afforded the opportunity to learn and thrive regardless of their abilities. The Americans with Disabilities Act (ADA) of 1990 was an important milestone in this regard.

One area in which there is still work to be done is in the way children with special needs are enabled to play with their peers. Specifically, playgrounds are often completely impractical for children with physical disabilities. Their ground surfaces may be impossible for wheelchairs to roll over, and their play areas may not have activities appropriate for children lacking in upper-body mobility, strength, and balance.

Last year, accessibility standards for playgrounds were made mandatory under the ADA so that children of differing abilities could play alongside each other. They include rules on the types of equipment, designs, and materials used in public playgrounds. But those inclusive standards can add significantly to the cost of building playgrounds.

A recent NPR report told the story of a family in Pocatello, Idaho, that led a fundraising effort to build a community playground that was accessible and fun for kids of all ability levels. It is Brooklyn’s Playground, named after the family’s wheelchair-bound seven-year-old daughter. Its wide ramps and smooth rubber ground coverings allow wheelchairs to reach all areas, and its swings have back support for children with upper-body disorders.

At 15,000 square feet and a cost of just over half a million dollars, most municipalities could not afford to build such a playground, but Brooklyn’s family spent eight months soliciting donations and organizing bake sales to make it happen.

When advocates and families work together to give special-needs children every possible opportunity, the entire community benefits.

The recent Supreme Court ruling striking down a portion of the Defense of Marriage Act (DOMA) will have widespread effects on many federal programs. It may take quite some time for the ruling to be fully implemented into law. But a recent statement from the Social Security Administration (SSA) shows some progress on that front.

On June 26, 2013, the Supreme Court invalidated Section 3 of DOMA, which denied federal benefits to legally married same-sex couples. On August 9, 2013, the SSA issued a statement from Carolyn W. Colvin, acting commissioner, announcing the administration “is now processing some retirement spouse claims for same-sex couples and paying benefits where they are due.” The statement encouraged all individuals who believe they may be eligible to apply for Social Security benefits.

Most same-sex couples who are married reside either in the state in which they married or another state that recognizes their marriage. Others relocated after marrying to states that do not recognize their marriage. For now, it is only certain that the former group will be eligible for federal benefits. It remains to be seen whether those in non-recognizing states will receive equal treatment by the federal government.

President Obama weighed in following the Supreme Court ruling, saying, “It’s my personal belief – but I’m speaking now as a president as opposed to as a lawyer – that if you’ve been married in Massachusetts and you move someplace else, you’re still married, and that under federal law you should be able to obtain the benefits of any lawfully married couple.”

A recent Wall Street Journal article discussed Medicare Part B premiums for higher-income beneficiaries. Medicare Part B covers doctor visits and outpatient services, and the basic Part B premium is $96.40 per month in 2009.

Higher-income Medicare beneficiaries have had to pay higher monthly Medicare Part B premiums since 2007, based on their “modified adjusted gross income” (MAGI), which is adjusted gross income plus tax-exempt interest income. For individuals with an MAGI over $85,000 per year, or couples with an MAGI over $170,000 per year, the premiums range from $134.90 to $308.30 per month per beneficiary. The Social Security Administration (SSA) has published a list of premiums by income and tax filing status in SSA Publication No. 05-10161.

Unfortunately, the Social Security Administration, which also handles Medicare enrollment, is not able to ask the Internal Revenue Service for the income data required to determine the appropriate Part B premium until an individual is enrolled in Social Security or Medicare. Mark Lassiter, a spokesman for the SSA in Baltimore, recently answered a question from a 67-year-old woman who has been paying the appropriate premium for herself based on her husband’s and her joint MAGI. Her husband recently turned 65, and he was informed that his premium would be the basic $96.40 per month. Mr. Lassiter said that when the “husband first files for Social Security at the point of or shortly before their Medicare eligibility age, there is a lag in our ability to determine the appropriate premium.” Social Security will adjust the premium retroactively after it gets the income information from the IRS; this adjustment may not occur for two to three months. The husband’s premium will eventually be the same as the wife’s premium, and the husband’s Social Security benefits will be adjusted to account for retroactive premiums due. Mr. Lassiter also stated that the husband should have received a letter from SSA advising him of the calculations for higher-income beneficiaries, and that the SSA would contact the IRS for income information.

If a beneficiary’s MAGI falls after the premium is set, SSA may adjust the premium if the income was reduced because the individual married or divorced, if the beneficiary’s spouse died, if either spouse quit working or reduced work hours, if either spouse lost income from property because of a disaster or other event beyond their control, or if either spouse’s benefit from an insured pension plan stopped or was reduced. The SSA has determined that alleged victims of criminal theft or an investment scam (such as alleged victims of Bernard Madoff’s Ponzi fraud) may be able to get their Part B premiums reduced.

The Hook Law Center (formerly Oast & Hook) offices are located in Virginia Beach, and Suffolk, convenient to the Peninsula, and Southside including the cities of Chesapeake, the Eastern Shore, Franklin, Hampton, Isle of Wight, Newport News, Norfolk, Poquoson, Portsmouth, Richmond, Smithfield, Suffolk, Virginia Beach, Williamsburg, Yorktown and Zuni. Content by elder law attorney, Andrew Hook and the Hook Law Center staff.